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Numbers at a Glance

For the 12-months ended September 30, 2023

$ 3.13
$ 4.90
$ 293.8 MM
$ 59.1 MM
Net Cash from Operating Activities
$ 53.2 MM
Free Cash Flow

Compelling Investment Thesis

Investors are attracted to our high operating margins, strong cash flows, and high barriers to entry in the adult nightclub business

This provides us with the resources to acquire and develop more clubs and restaurants. We manage RCI like long-term owners. We believe growth of free cash flow per share is the primary driver of long-term value. Our goal is to increase free cash flow per share at least 10-15% on a compound annual basis.

Our capital allocation strategy, which was implemented at the end of Fiscal 2015, provides us with disciplined guidelines on how we should grow free cash flow per share

We may deviate from this strategy if other strategic rationale warrants. We calculate free cash flow per share as net cash flows from operating activities less maintenance capital expenditures divided by average shares outstanding.

Based on our capital allocation strategy, we will consider:

  • Acquiring or developing clubs or sports-bar restaurants if we believe they have the potential to provide a minimum cash on cash return of 25-33% absent an otherwise strategic rationale
  • Disposing underperforming assets to free up capital for more productive use
  • Buying back our own stock if the after-tax yield on free cash flow per share is more than 10%
  • Paying down our most expensive debt if it makes sense on a tax-adjusted basis or there is an otherwise strategic rationale

Our capital allocation strategy has proven highly effective

From fiscal 2018 through fiscal 2023, we improved diluted EPS at a compound annual growth rate (CAGR) of 8%, reflecting increased revenue at a CAGR of 12% and flowing through net income at a CAGR of 7%. As a result, net cash provided by operating activities improved at 18% and free cash flow at 18% CAGR.

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